Copart Reports Second Quarter Fiscal 2014 Financial Results

DALLAS--(BUSINESS WIRE)--Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended January 31, 2014.

For the three months ended January 31, 2014, revenue, operating income and net income were $286.4 million, $71.5 million and $45.3 million, respectively. These represent increases in revenue of $20.2 million, or 7.6%; in operating income of $8.7 million, or 13.9%; and in net income of $5.7 million, or 14.4%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.35 compared to $0.31 last year, an increase of 12.9%.

For the six months ended January 31, 2014, revenue, operating income and net income were $566.3 million, $136.4 million and $86.8 million, respectively. These represent an increase in revenue of $61.3 million, or 12.1%; a decrease in operating income of $0.7 million, or 0.5%; and an increase in net income of $1.3 million, or 1.5%, respectively, from the same quarter last year. Fully diluted earnings per share for the six months were $0.66 for both periods.

Included in the financial results for the most recent quarter are the severance, relocation and lease termination costs of $4.5 million associated with the integration of the QCSA acquisition, which we closed on May 30, 2013, and the relocation of the technology department from Fairfield, California to Dallas, Texas. We expect severance and lease termination costs to continue into our fourth quarter of this fiscal year.

On Wednesday, February 26, 2014, at 11 a.m. Eastern time, Copart will conduct a conference call to discuss the results for the quarter. The call will be webcast live at http://64.202.98.81/conferenceamerica. A replay of the call will be available through April 27, 2014 by calling [phone]. Use confirmation code #91488337.

About Copart

Copart, founded in 1982, provides vehicle sellers with a full range of remarketing services to process and sell salvage and clean title vehicles to dealers, dismantlers, rebuilders, exporters and, in some states, to end users. Copart remarkets the vehicles through Internet sales utilizing its VB3 technology. Copart sells vehicles on behalf of insurance companies, banks, finance companies, fleet operators, dealers, car dealerships and others, as well as cars sourced from the general public. The company currently operates in the United States and Canada (www.copart.com), the United Kingdom (www.copart.co.uk), Brazil (www.copart.com.br), Germany (www.copart.de), the United Arab Emirates (www.copart.ae) and Spain (www.autoresiduos.com). Copart links sellers to more than 750,000 members in over 140 countries worldwide through our online multi-channel platform. For more information, or to become a member, visit www.copart.com.

Cautionary Note About Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, and these forward-looking statements are subject to substantial risks and uncertainties. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected or implied by our statements and comments. For a more complete discussion of the risks that could affect our business, please review the “Management's Discussion and Analysis” and the other risks identified in Copart’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission. We encourage investors to review these disclosures carefully. We do not undertake to update any forward-looking statement that may be made from time to time on our behalf.

Copart, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
	Three months ended						Six months ended
	January 31,						January 31,
	2014			2013			2014			2013
Service revenues and vehicle sales:
Service revenues	$	235,732		$	216,920		$	462,095		$	412,099
Vehicle sales		50,702			49,265			104,222			92,952
Total service revenues and vehicle sales	$	286,434		$	266,185		$	566,317		$	505,051
Operating costs and expenses:
Yard operations		121,786			116,501			237,647			204,522
Cost of vehicle sales		43,642			42,204			89,733			78,515
Yard depreciation and amortization		9,460			10,663			19,555			19,761
Gross margin		111,546			96,817			219,382			202,253
General and administrative		36,447			30,098			74,914			57,436
General and administrative depreciation and amortization		3,615			3,949			8,025			7,690
Total operating expenses		214,950			203,415			429,874			367,924
Operating income		71,484			62,770			136,443			137,127
Other income (expense):
Interest expense, net		(2,066	)		(2,397	)		(4,203	)		(4,873	)
Other income		1,170			744			2,593			451
Total other expense		(896	)		(1,653	)		(1,610	)		(4,422	)
Income before income taxes		70,588			61,117			134,833			132,705
Income taxes		25,243			21,477			48,066			47,220
Net income	$	45,345		$	39,640		$	86,767		$	85,485
Earnings per share-basic
Basic net income per share	$	0.36		$	0.32		$	0.69		$	0.69
Weighted average common shares outstanding		125,550			124,709			125,505			124,505
Earnings per share-diluted
Diluted net income per share	$	0.35		$	0.31		$	0.66		$	0.66
Diluted weighted average common shares outstanding		131,087			129,520			130,751			128,997

Copart, Inc.
Consolidated Balance Sheets
(in thousands)
(Unaudited)
	January 31,			July 31,
	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	46,199		$	63,631
Accounts receivable, net		222,104			182,714
Vehicle pooling costs and inventories		33,597			31,202
Income taxes receivable		5,628			9,416
Deferred income taxes		3,829			2,216
Prepaid expenses and other assets		20,069			15,344
Assets held for sale		1,503			1,929
Total current assets		332,929			306,452
Property and equipment, net		707,379			677,517
Intangibles, net		19,709			17,706
Goodwill		291,227			267,463
Deferred income taxes		30,654			30,117
Other assets		56,595			35,226
Total assets	$	1,438,493		$	1,334,481
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	154,871		$	136,648
Bank overdraft		17,034			16,291
Deferred revenue		5,179			4,832
Income taxes payable		5,539			4,741
Current portion of long-term debt and capital lease obligations		77,028			76,047
Total current liabilities		259,651			238,559
Deferred income taxes		7,461			8,071
Income taxes payable		24,165			23,091
Long-term debt and capital lease obligations		261,182			296,410
Other liabilities		5,310			5,949
Total liabilities		557,769			572,080
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value – 5,000,000 shares authorized; no shares issued and outstanding at January 31, 2014 and July 31, 2013 respectively		—			—
Common stock, $0.0001 par value – 180,000,000 shares authorized; 125,860,010 and 125,494,995 shares issued and outstanding at January 31, 2014 and July 31, 2013, respectively		13			13
Additional paid-in capital		384,947			368,769
Accumulated other comprehensive loss		(31,718	)		(47,161	)
Retained earnings		527,482			440,780
Total stockholders’ equity		880,724			762,401
Total liabilities and stockholders’ equity	$	1,438,493		$	1,334,481

Copart, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
	Three Months Ended
	January 31,
	2014			2013
Cash flows from operating activities:
Net income	$	86,767		$	85,485
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		27,580			27,451
Allowance for doubtful accounts		884			184
Stock-based compensation		10,639			9,920
Excess tax benefits from stock-based compensation		(1,171	)		(5,293	)
Gain on sale of property and equipment		(1,743	)		(183	)
Deferred income taxes		(5,982	)		(6,986	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		(38,928	)		(58,315	)
Vehicle pooling costs and inventories		(1,718	)		(6,860	)
Prepaid expenses and other current assets		(4,266	)		(3,529	)
Other assets		(12,602	)		(7,014	)
Accounts payable and accrued liabilities		7,724			17,845
Deferred revenue		347			(28	)
Income taxes receivable		4,799			(4,776	)
Income taxes payable		1,494			4,918
Other liabilities		1,967			271
Net cash provided by operating activities		75,791			53,090
Cash flows from investing activities:
Purchases of property and equipment including acquisitions		(65,996	)		(116,925	)
Proceeds from sale of property and assets held for sale		2,576			1,851
Net cash used in investing activities		(63,420	)		(115,074	)
Cash flows from financing activities:
Proceeds from the exercise of stock options		4,550			16,358
Excess tax benefit from stock-based payment compensation		1,171			5,293
Proceeds from the issuance of Employee Stock Purchase Plan shares		1,115			951
Change in bank overdraft		743			—
Principal payments on long-term debt		(37,500	)		(37,505	)
Repurchases of common stock		(80	)		(14,512	)
Net cash used in financing activities		(30,001	)		(29,415	)
Effect of foreign currency translation		198			797
Net decrease in cash and cash equivalents		(17,432)			(90,602	)
Cash and cash equivalents at beginning of period		63,631			140,112
Cash and cash equivalents at end of period	$46,199			$	49,510
Supplemental disclosure of cash flow information:
Interest paid	$4,495			$	5,220
Income taxes paid	$47,891			$	55,874